Moss Bros can breathe a sigh of relief—it’s got the approval from the majority of its creditors for a company voluntary arrangement.
The British men’s wear chain launched the CVA last month to financially restructure after the coronavirus pandemic derailed demand for its core formal and dress-occasion garb. CVAs allow companies to work out deals with landlords and other creditors. However, CVAs require creditor approval before they can take effect, and Moss secured the 75 percent minimum needed These arrangements are still considered good for companies because they can avoid administration, what American firms know as bankruptcy, which can sometimes snowball into a liquidation. And CVAs can benefit creditors, too—oftentimes they provide a better recovery than either an administrative proceeding or liquidation.
Moss Bros in September hired accounting and financial services giant KPMG to assist with a CVA. The retailer was also considering moving from fixed to revenue-based monthly rents, which has been a common refrain across British retail. Mike Ashley, owner of Frasers Group, has been vocal about the need to rethink rent.
The specific details of the CVA for Moss Bros haven’t been disclosed, other than that the arrangement would help the distressed men’s retailer reset its cost base.
Moss Bros operates 128 stores. When the CVA was launched last month, the company was looking to close about two dozen stores and shift to sales-based rent at some locations.
The retailer was acquired in June by Brigadier Acquisition Co., the owner of Crew Clothing, for 22.6 million pounds ($27.9 million).